Rural Health Care Pilot Program

The FCC has initiated a pilot funding program to facilitate the creation of a nationwide broadband network dedicated to health care, connecting public and
private non-profit health care providers in rural and urban locations. Set forth below is information about this pilot program, including:

Please Note: The overview of the pilot program and the FAQs are provided for general informational purposes
only, and should not be considered official summaries of the FCC order adopting the program. Both the overview of the program and the FAQs may be updated
periodically. Interested parties may wish to check this web page accordingly.

05/03/11 Order (WC Docket No. 02-60). Subject to certain
conditions, the Wireline Competition Bureau extends by one year, to June 30, 2012, the deadline for participants in the Rural Health Care Pilot Program to choose a
vendor and request funding commitments. The Wireline Competition Bureau also extends by one year the invoicing deadline for Rural Health Care Pilot Program
participants. Order: Word | Acrobat

02/15/11
Instruction Letter to USAC Released. Summary: DA 11-262. With this letter, we direct the Universal Service Administrative Company (USAC) to take steps to
implement the recommendations in the Government Accountability Office Report entitled Telecommunications: FCC's Performance Management Weaknesses Could
Jeopardize Proposed Reforms of the Rural Health Care Program. Letter: Word | Acrobat

12/09/10 Public Notice (WC Docket No.
02-60). The Wireline Competition Bureau seeks comment on the Michigan Public Health Institute’s request for waiver of the five-year invoicing period under the universal
service Rural Health Care Pilot Program. Public Notice: Word | Acrobat

12/06/10 Public Notice (WC Docket No. 02-60). The Wireline Competition Bureau seeks comment on a request filed by the Indiana
Telehealth Network for an extension of the June 30, 2011 deadline for participants in the universal service Rural Health Care Pilot Program to select a vendor and request
funding commitment letters from the Universal Service Administrative Company (USAC). Public Notice: Word | Acrobat

08/09/10 Public Notice (WC Docket No.
02-60): Comments are due by September 8, 2010, and reply comments are due by September 23, 2010, for the Rural Health Care NPRM released by the Commission on
July 15, 2010. Public Notice: Word |
Acrobat

07/15/10 FCC seeks comment on reforms
to the Universal Service Rural Health Care Fund to expand the reach and use of broadband connectivity by health care providers throughout the nation. Notice of
Proposed Rulemaking: Word | Acrobat News Release: Word | Acrobat

02/18/10
The Wireline Competition Bureau extends by one year, to June 30, 2011, the deadline for participants in the Rural Health Care Pilot Program to select a vendor and
request a funding commitment from USAC. Order: Word | Acrobat

12/22/09 Requests For Extension Of The June 30, 2010 Deadline For Funding Commitments Under The Universal Service Rural Health
Care Pilot Program. Public Notice: Word | Acrobat

11/12/09National Broadband Plan (DA
09-2413): Comments sought on the health care delivery elements of the national broadband plan. The notice also seeks input relating to the universal service
rural health care support mechanism and the rural health care Pilot Program, specifically as such programs may assist in the deployment and adoption of broadband
services. Public Notice: Word | Acrobat

11/02/09 North Carolina RHCPP extension request (DA 09-2362):
WCB seeks comment on a request filed by the North Carolina TeleHealth Network for an extension of the June 30, 2010 deadline to file funding commitment requests
under the universal service Rural Health Care Pilot Program. Public Notice: Word | Acrobat

09/28/09 Rural Health Care Pilot Program quarterly reports: In this
Public Notice, the Wireline Competition Bureau reminds Rural Health Care Pilot Program participants that quarterly reports are due October 30. In addition, we remind
participants of specific information which must be included in the reports. Public Notice: Word | Acrobat

08/10/09 Rural Health Care Pilot Program Form 466-A Deadline
Waiver PN: In this PN, WCB establishes the filing deadline for Form 466-A (Funding Commitment Requests) for the second funding year of the Rural Health Care Pilot
Program. Public Notice: Word | Acrobat

10/01/08 Holzer Consolidated
Health Systems (HCHS) and Southern Ohio Health Care Network (SOHCN): Wireline Competition Bureau seeks comment on a request by HCHS and SOHC to merge
their Rural Health Care Pilot Program projects in Ohio into one project, with SOHC as the successor of the HCHS project. Comments are due October 8, 2008, and reply
comments are due October 15, 2008. Public Notice: Word | Acrobat

08/17/07 U.S. Department of Health and Human Services Office of the
National Coordinator for Health Information Technology Letter to FCC Identifying Ways the Pilot Program Can Advance the Goals of the National Health Information
Network Initiative. Letter: PDF

11/06/06 WCB Seeks Comment on the Petition for Reconsideration or in the Alternative, Clarification Filed by National LambdaRail, Inc. On
October 30, 2006, National LambdaRail, Inc. filed a petition for reconsideration or, in the alternative, clarification of the Commission's Order establishing a rural health care
pilot program to encourage the provision of telehealth and telemedicine services throughout the nation. Comment Date: 11/21/06; Reply Comment Date: 11/28/06. WC
Docket No. 02-60. Public Notice: Word | PDF

On November 19, 2007, the Federal Communications Commission (Commission)
released the Rural Health Care Pilot Program Selection Order selecting 69
participants covering 42 states and three U.S. territories to be eligible to
receive funding for up to 85 percent of the costs associated with: (1) the
construction of a state or regional broadband network and the advanced
telecommunications and information services provided over that network; (2)
connecting to Internet 2 or National LambdaRail (NLR); and (3) connecting to the
public Internet.

The Universal Service Administrative Company (USAC) will administer the
program under the oversight of the Commission. USAC is an independent,
not-for-profit corporation created by the Commission and designated as the
administrator of the Universal Service Fund (USF). USAC administers USF programs
for high cost companies serving rural areas, low-income consumers, schools and
libraries, as well as for rural health care providers. Information concerning
USAC can be found on its website at www.USAC.org.

Total maximum funding for the 69 selected participants will be approximately
$417 million over three years (Funding Years 2007 to 2009 of the existing Rural
Health Care support mechanism) (or $139 million per funding year). Selected
participants’ network build-outs must be completed within five years of
receiving an initial funding commitment letter from USAC.

The Commission intends to use the information gathered from funding
Participants in the Pilot Program to develop a more complete and practical
understanding of how to modify the pre-existing universal service Rural Health
Care mechanism long-term in order to support the deployment of a broadband
nationwide health care network, focusing on the rural areas of the country where
support is needed the most.

2. How does the
Pilot Program differ from the existing Rural Health Care Program?

The existing Rural Health Care funding mechanism is designed to ensure that
rural health care providers pay no more than their urban counterparts for their
telecommunications and Internet access needs in providing health
care services. In contrast, the Pilot Program is broader in scope and will fund
up to 85 percent of the costs of the actual infrastructure design and
construction of broadband networks for health care purposes. If requested, the
Pilot Program will also provide funding to support up to 85 percent of the cost
of connecting the state or regional networks to Internet2 or National LambdaRail,
which are both dedicated nationwide backbones, as well as to the public
Internet. In addition, unlike the existing program, the Pilot Program will fund
connecting eligible health care providers in rural areas to those in urban
areas. This will promote telehealth and telemedicine access for rural health
care providers to medical hubs, which are often located in urban areas.

The benefits of telehealth and telemedicine applications that ride over
broadband facilities are enormous, and a broadband network that connects
multiple health care providers, including a significant number in rural areas,
would bring those benefits to those areas of the country where the need for
those benefits is most acute. For example:

Telehealth applications allow patients to access critically needed medical
specialists in a variety of practices, including cardiology, pediatrics, and
radiology, without leaving their homes or communities.

Linking statewide and regional networks to a nationwide backbone would
connect a number of government research institutions, as well as academic,
public, and private health care institutions that are repositories of medical
expertise and information.

Intensive care doctors and nurses can monitor critically ill patients at
multiple locations around the clock.

Health care providers would benefit from advanced applications in
continuing education and research.

A nationwide health care network would enhance health care communities’
abilities to provide a rapid and coordinated response in the event of a public
health crisis and provide vital links for disaster preparedness and emergency
response.

Public and not-for-profit health care providers are eligible to receive
funding. For purposes of the Pilot Program, the definition of “Health Care
Provider” is the same as that of Section 254(h)(7)(B) of the Communications Act
and the FCC’s rules for the existing Rural Health Care program. Eligible health
care providers include:

Although emergency medical service facilities themselves are not eligible
providers for purposes of the RHC Pilot Program, Pilot Program funds may be
used to support costs of connecting an emergency medical service facility to
eligible health care providers to the extent that the emergency medical
services facility is part of the eligible health care provider.

Non-eligible health care providers include any for-profit institutions
(except as noted above), or any other types of entities not listed above.
Examples of non-eligible providers include:

If a data center is connected (e.g., transmits data to and receives
data from) to an eligible health care provider, the data center may qualify for
funding as an eligible network component. For example, the Rural Wisconsin
Health Cooperative Consortium is appropriately using Pilot Program funding for
an electronic healthcare records (EHRs) data center connected to numerous
eligible health care providers. Rural Wisconsin’s Pilot Program application,
which explains its shared EHR system, may be accessed at:
fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_documen
t=6519409890

Data centers, however, do not qualify as eligible health care providers under
section 254(h)(7)(B) of the Communications Act and FCC rules. Examples of
eligible health care providers are included in the answer to FAQ # 4 above.
Accordingly, a stand-alone data center (not connected to an eligible health care
provider) is not eligible for Pilot Program funding.

If a product or service contains both eligible ad ineligible components,
costs should be allocated to the extent that a clear delineation can be made
between the eligible and ineligible components. See 2007 RHC PP Selection
Order, para 76. Thus, costs associated with data centers that are unique and specific
to the Pilot Program projects may be reimbursed with Pilot Program funds,
whereas data centers that handle traffic for eligible health care providers as
well as traffic for other entities could receive funding for a portion of the
use of such data center (i.e., the portion that relates to eligible use).

6. May health care providers (either those that did not apply for the Pilot Program or those that applied but were not selected to
participate in the Pilot Program) now participate in the Pilot Program?

The Pilot Program is limited to Participants that were selected in the
Rural Health Care Pilot Program Selection Order. However, eligible health
care providers not represented in the selected Participants’ applications may
pursue ways to be included in their networks which are eligible for Pilot
Program funding. Eligible health care providers not participating in the Pilot
Program also are encouraged to contact USAC to discuss their possible
participation in the existing Rural Health Care support mechanism which, among
other things, provides discounts on installation and monthly charges for
telecommunications and Internet access service. Information on the existing
program and USAC contact information is available on USAC’s website at
www.usac.org/rhc/. In addition, after three years, the Commission intends to
revisit its rules and determine how to improve the current program, and
encourages all eligible health care providers to participate in any subsequent
proceedings.

7. How will the Pilot Program
help public safety and health care officials coordinate during emergencies?

In 2004, the President issued an Executive Order calling for the development
and implementation of a national interoperable health information technology
infrastructure. To further this goal, funded Participants, where feasible, must:
(1) use health information technology (IT) systems and products that meet
interoperability standards recognized by the Secretary of the United States
Department of Health and Human Services (HHS); (2) use health IT products
certified by the Certification Commission for Healthcare Information Technology;
(3) support the Nationwide Health Information Network (NHIN) architecture by
coordinating activities with the organizations performing NHIN trial
implementations; (4) use resources available at HHS’s Agency for Healthcare
Research and Quality National Resource Center for Health Information Technology;
(5) educate themselves concerning the Pandemic and All Hazards Preparedness Act
and coordinate with the HHS Assistant Secretary for Public Response as a
resource for telehealth inventory and for the implementation of other
preparedness and response initiatives; and (6) use resources available through
HHS’s Centers for Disease Control and Prevention (CDC) Public Health Information
Network to facilitate interoperability with public health and emergency
organizations

Pilot Program Participants must coordinate in the use of their health care
networks with HHS and, in particular, with the CDC in instances of national,
regional, or local public health emergencies (e.g., pandemics, bioterrorism). In
such instances, where feasible, selected Participants shall provide access to
their supported networks to HHS, including CDC, and other public health
officials.

The Universal Service Administrative Company (USAC)
will administer the
program under the oversight of the Commission. USAC is an independent,
not-for-profit corporation created by the Commission and designated as the
administrator of the Universal Service Fund (USF). USAC administers USF programs
for high cost companies serving rural areas, low-income consumers, schools and
libraries, as well as for rural health care providers. Information concerning
USAC can be found on its website at www.USAC.org.

USAC will also conduct a targeted outreach program to educate and inform
Participants on the Pilot Program administrative process, including various
filing requirements and deadlines, in order to minimize the possibility of
selected Participants making inadvertent ministerial or clerical errors in
completing the required forms.

9. What is the administrative/implementation
process for reimbursement of selected Participants?

Selected Participants must file FCC Form 465 with USAC to make a bona fide request for supported
services. The FCC Form 465 is the means by which a
selected Participant requests bids for supported services and certifies to USAC
that it is eligible to benefit from the Rural Health Care support mechanism.
USAC posts the completed FCC Form 465 on its website and a selected Participant
must wait at least 28 days from the date on which its FCC Form 465 is posted on
USAC’s website before selecting a service provider(s).

Next, after the selected Participants choose their service provider(s), they
must submit to USAC FCC Form 466-A to indicate the type(s) of service ordered,
the cost of the ordered service, information about the service provider(s), and
the terms of the service agreement(s). Each selected Participant must certify on
the FCC Form 466-A that the Participant has selected the most cost-effective
method of providing the selected service(s). Along with its FCC Form 466-A, a
selected Participant must submit to USAC a copy of the contracts or service
agreements with the selected service provider(s) and must include a detailed
line-item network costs worksheet that includes a breakdown of total network
costs (both eligible and ineligible costs). Selected Participants’ network costs
worksheet submissions must demonstrate how ineligible (e.g., for-profit)
Participants will pay their fair share of network costs.

FCC Form 467 is then used by the selected Participant to notify USAC that the
service provider has begun providing the supported service and is also used to
notify USAC when the applicant has discontinued the service or if the service
was or will not be turned on during the funding year.

USAC will disburse Pilot Program funds based on monthly submissions (i.e.,
invoices) from service providers of actual incurred eligible expenses. Service
providers are only permitted to invoice USAC for eligible services apportioned
to eligible health care provider network Participants.

Personnel costs (including salaries and fringe benefits), except for those
personnel directly engaged in designing, engineering, installing,
constructing, and managing the dedicated broadband network. Ineligible costs
of this category include, for example, personnel to perform program management
and coordination, program administration, and marketing.

Travel costs.

Legal costs.

Training, except for basic training or instruction directly related to and
required for broadband network installation and associated network operations.
For example, costs for end-user training, e.g., training of health care
provider personnel in the use of telemedicine applications, are ineligible.

Program administration or technical coordination that involves anything
other than the design, engineering, operations, installation, or construction
of the network.

Inside wiring or networking equipment (e.g., video/Web conferencing
equipment and wireless user devices) on health care provider premises except
for equipment that terminates a carrier’s or other provider’s transmission
facility and any router/switch that is directly connected to either the
facility or the terminating equipment.

Software, unless used for network management, maintenance, or other
network operations; software development (excluding development of software
that supports network management, maintenance, and other network operations);
Web server hosting; and Website/Portal development.

12. Does Pilot Program funding covering
network design studies include costs associated with consultant services, personnel costs, or program administration?

Yes. As specified in the
2007 Rural Health Care Pilot Program Selection
Order, for purposes of the Pilot Program, funding covers all costs to set up
a network design study, costs to analyze both technical and non-technical
requirements of the network design; and all costs to develop a feasible network
design based on network design analyses. Personnel costs (including salaries and
fringe benefits) for personnel directly engaged in designing a Participant’s
broadband network are also covered by the Pilot Program. In addition, Pilot
Program funding may be used for costs associated with program administration or
technical coordination that involve design of the network. See 2007 RHC PP
Selection Order, paras. 74-75, n. 238.

13. May a Participant use Pilot Program universal service support to deploy its network and then later lease or sell parts of its
network facilities or network capacity?

No. A Pilot Program Participant may not sell, lease, or transfer its network
facilities or network capacity supported by Pilot Program universal service
funding to another entity. See 47 U.S.C. § 254(h)(3); 47 C.F.R. §
54.617(a); 2007 RHC PP Selection Order, paras. 105-108.

Pilot Program funds must be used to support the costs of constructing
dedicated telehealth broadband networks that connect health care providers in a
state or region, and connect such state and regional networks to the public
Internet, as well as, Internet2, or National LambdaRail. In doing so, Pilot
Program funding is available only for network components eligible for support.
See 2007 RHC PP Selection Order, para. 74; 2006 Pilot Program Order, paras. 10,
14, 74-76.

Section 254(h)(3) of the 1996 Act provides that “[t]elecommunications
services and network capacity provided to a public institutional
telecommunications user under this section may not be sold, resold, or otherwise
transferred by such user in consideration for money or any other thing of
value.” Consistent with this statute, section 54.617 of the Commission’s rules
states, “services purchased pursuant to universal service support mechanisms
under this subpart shall not be sold, resold, or transferred in consideration
for money or another thing of value.” See 47 U.S.C. § 254(h)(3); 47 C.F.R. §
54.617(a); 2007 RHC PP Selection Order, paras. 105-108.

A Participant, however, may share excess network capacity with an ineligible
entity so long as the ineligible entity pays its fair share of network costs
attributable to the portion of the network capacity used, and the Participant
has not received program funding for such portion. See 2007 RHC PP Selection
Order, para. 107.

No. Consistent with section 254(h)(2)(A) of the 1996 Act, the program is
“competitively neutral,” which means that universal service support mechanisms
and rules neither unfairly advantage nor disadvantage one provider over another,
and neither unfairly favor nor disfavor one technology over another. Provided
they comply with the administrative and other requirements of the Pilot
Program Selection Order and Commission rules, eligible health care providers
may choose any technology and provider of the broadband infrastructure and
connectivity needed to provide telehealth, including telemedicine services.
Consistent with section 254(h)(2)(A) of the 1996 Act, the ultimate selection of
a vendor is subject to competitive bidding requirements.

15. Are there restrictions on from where selected Participants may derive their 15 percent (or more)
contribution?

Yes. Only funds from an eligible source will apply towards selected
Participants’ required 15 percent minimum contribution. Eligible sources include
the applicant or eligible health care provider Participants; state grants,
funding, or appropriations; federal funding, grants, loans, or appropriations
except for Rural Health Care funding; and other grant funding, including private
grants. Ineligible sources include in-kind or implied contributions; a local
exchange carrier (LEC) or other telecom carrier, utility, contractor, or other
service provider; and for-profit participants. Moreover, selected Participants
may not obtain any portion of their 15 percent contribution from the existing
Rural Health Care support mechanism.

16.
May Pilot Program participants use broadband grant or loan funding authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) for their Pilot Program
networks?

Yes. As discussed in the 2007 Rural Health Care Pilot Program Selection
Order, Pilot Program participants may utilize federal grants and loans to
pay for their minimum 15 percent contribution. See 2007 RHC PP Selection Order, para. 77. Accordingly, Pilot Program participants may seek ARRA funding
for their 15 percent match provided that this use of funding is consistent with all
requirements of the ARRA.

The FCC does not have jurisdiction over the broadband grants and loans
authorized by the ARRA. The U.S. Department of Commerce’s National
Telecommunications and Information Administration (NTIA) and the U.S. Department
of Agriculture’s Rural Utilities Service (RUS) are responsible for administering
the grants and loans authorized by the ARRA. Detailed information about NTIA’s
and RUS’s broadband grant and loan programs can be found at the following
websites: www2.ntia.doc.gov/www.rurdev.usda.gov/RUSTelecomPrograms.html

Yes, if a selected Participant wishes to upgrade, replace technology, or add
eligible health care providers to its proposed network prior to commencing and
completing the competitive bidding process, it may receive support to do so as
long as that support does not exceed the maximum available support amount listed
in the Pilot Program Selection Order and the support is used for eligible
expenses. However, each funding commitment letter (FCL) caps the Participant’s
support for the services covered by the FCL and the last FCL issued to the
Participant in a Funding Year caps the support available for that Funding Year.
The difference between the total amount committed under all FCLs for the
Participant for the Funding Year and the maximum support amount for the
Participant for the Funding Year – the “cap carry over” amount – will then be
applied to the next Funding Year in addition to the Participant’s maximum
support amount for the next Funding Year.

The Pilot Program operates under the Commission’s existing
universal service
rules, including the competitive bidding requirements. The Commission, however,
provided for a limited exception to the competitive bidding rules allowing
applicants to pre-select the use of Internet2 or National LambdaRail (NLR) as a
nationwide backbone provider in their applications filed in May 2007 to
participate in the Pilot Program. Other than existing pre-selections covered by
this approved, limited exception, all funding requests are subject to the
competitive bidding rules.

The competitive bidding rules ensure that health care providers are aware of
cost-effective alternatives and ensure that universal service support is used
wisely and efficiently.

The competitive bidding rules also ensure that universal service support does
not disadvantage one provider over another, or unfairly favor or disfavor one
technology over another.

19. May Pilot
Program participants be allowed to “self-provision” components of their projects, such as network design studies and modeling?

Yes. A participant may
ultimately select itself to “self-provision”
components of its project – but only after participating in a competitive
bidding process in which the participant determines that it is the most
cost-effective provider. After selecting a vendor, whether itself or another
provider, a participant must certify that it selected the most cost-effective
method of providing service. See 2007 RHC PP Selection Order, para. 100.

As explained in the answer to FAQ # 18 above, the competitive bidding rules
ensure that Pilot Program participants are aware of cost-effective alternatives,
and that universal service support is used wisely and efficiently.

20. Does a Participant need to submit letters of agency with its forms and materials when it only seeks bids for a network design
study?

Yes. Consistent with the 2007 Rural Health Care Pilot Program Selection
Order, each Participant is to include with its FCC Form 465 a Letter of
Agency (LOA) from each participating health care facility to authorize the lead
project coordinator to act on its behalf, to demonstrate that each health care
provider has agreed to participate in the selected participant’s network, and to
avoid improper duplicate support for health care providers participating in
multiple networks. See 2007 RHC PP Selection Order, para. 87.

21. What steps has the Commission taken to ensure that Pilot Program funds will be used for their intended
purposes?

In order to receive universal service support, selected Participants must submit, in addition to the required USAC Forms, detailed worksheets
concerning
their proposed network costs (both eligible and ineligible), certifications
demonstrating universal service support will be used for its intended purposes,
letters of agency from each participating health care provider, and detailed
invoices showing actual incurred costs of project build-out, among others.

In addition, all Pilot Program Participants (health care facilities and
service providers) are subject to being audited by the Office of the Inspector
General.

USAC will disburse Pilot Program funds based on monthly submissions (i.e.,
invoices) of actual incurred eligible expenses, and will respond to service
provider invoices in accordance with its current bi-monthly invoicing payment
plan. This invoice process will permit disbursement of funds to ensure that the
selected Participants’ network projects proceed, while allowing USAC and the
Commission to monitor expenditures in order to ensure compliance with the Pilot
Program and prevent waste, fraud, and abuse.

23. How will the FCC ensure selected Participants do not game the system?

The Commission will ensure waste,
fraud, and abuse does not occur by
requiring all Participants to comply with the competitive bidding requirements.
In addition, USAC will conduct random site visits to selected Participants to
ensure support is being used for its intended purposes, and as necessary and
appropriate based on USAC’s review of the selected Participants’ data
submissions.

Each Pilot Program Participant and service provider shall be subject to audit
by the Commission’s Office of the Inspector General (OIG) and, if necessary,
investigated by the OIG, to determine compliance with the Pilot Program,
Commission rules and orders, as well as section 254 of the 1996 Act. To further
prevent against waste, fraud, and abuse, selected Participants are required to
identify any consultants, service providers, or any other outside experts,
whether paid or unpaid, who aided in the preparation of their Pilot Program
applications.

24. What types of information should be included
in a participant’s sustainability plan?

In order to ensure the long-term success of broadband health care networks
and to prevent wasteful allocation of limited universal service funds, RHC Pilot
Program participants are required to provide assurances that their proposed
networks will be self-sustaining once established.

Although each project’s sustainability plan will be reviewed on a case by
case basis, generally, a sustainability plan should discuss the following
points:

Minimum 15% Funding Match: Discuss status of obtaining minimum 15% match
for the project. If such project funding is dependent on appropriations or
other special conditions, such conditions should be discussed.

Projected sustainability period: Indicate the sustainability period and
how it compares to the initial investment. Although a sustainability period of
10 years is generally appropriate, the period of sustainability should be
commensurate with the investments made with Pilot Program funds.

Principal factors: Discuss each of the principal factors that were
considered by the participant to demonstrate sustainability. These factors
should be discussed in narrative, and (if appropriate) shown in proposed
budgets.

Terms of Membership in the Network:

Describe generally any agreements made (or to be entered into) by
network members (e.g., participation agreements, memoranda of understanding,
usage agreements, or other documents).

Describe financial and/or time commitments made by proposed members of
the network.

If the project includes excess bandwidth for growth of the network,
describe how such excess bandwidth will be financed.

If the network will include eligible health care providers and other
network members, describe how fees for joining and using the network will be
assessed.

Excess Capacity: If the project includes excess capacity to be used for
any purpose other than the dedicated health care network, explain the funding
for such excess capacity. In doing so: (i) indicate how users of such excess
capacity are paying their fair share; and (ii) describe generally agreements
made between the health care network portion of the project and the excess
capacity portion of the project (e.g., cost allocation, sharing agreements,
maintenance and access, ownership).

Ownership Structure: Explain who will own each material element of the
network, and arrangements made to ensure continued use of such elements by the
network members for the duration of the sustainability period.

25. How will the Commission evaluate the
success of the Pilot Program?

Selected Participants will be required to submit to USAC and to the
Commission quarterly reports containing certain data specified in the Pilot
Program Selection Order. These data will serve as a guide for further
Commission action by informing the Commission’s understanding of
cost-effectiveness and efficacy of the different state and regional networks
funded. These data will also enable the Commission to ensure Rural Health Care
program funds are being used in a manner consistent with section 254 of the 1996
Act, the Pilot Program Selection Order, and the Commission’s rules and orders.
In particular, the Commission has determined collection of this data is critical
to the goal of preventing waste, fraud, and abuse by ensuring that funding is
flowing through to its intended purpose.

26. Can discounts under the existing Rural Health
Care (RHC) support mechanism be a part of a RHC Pilot Program participant's self-sustainability plan?

Yes. RHC Pilot Program participants are required
to provide assurances that
their proposed networks will be self-sustaining once established. Any reliance
on the existing RHC support mechanism to demonstrate network self-sustainability
under the Pilot Program must be supported by a showing that facilities and
services are currently receiving or would be eligible to receive discounts under
the existing RHC support mechanism. Participants may make this showing in their
quarterly reports.

27. In selecting a vendor,
may a participant consider the vendor’s commitment to provide excess capacity for community use?

Yes, as long as USF funds are not used to pay for
the excess capacity and
there is no increase in the cost for the dedicated network facilities.

The Pilot Program will fund up to 85% of the costs incurred to deploy a state
or regional dedicated broadband health care network. Only eligible health
care providers and consortia that include eligible health care providers may
apply for and receive funding. Ineligible entities are prohibited from receiving
any funding from the Pilot Program. A selected participant is not restricted
from sharing a network with ineligible entities, but the ineligible entities
must pay their fair share of network costs attributable to the portion of
network capacity used. See 2007 RHC PP Selection Order, paras. 16-19, 47,
73, 107. For these reasons, a participant must be able to demonstrate that a
vendor’s provision of excess capacity for community use will not increase the
cost of the dedicated broadband health care network.

As part of the competitive bidding requirements, participants must certify to
USAC that the vendor it chooses is, to the best of the participant’s knowledge,
the most cost-effective service or facility provider available. The Commission
has defined “cost-effective” as “the method that costs the least after
consideration of the features, quality of transmission, reliability, and other
factors that the health care provider deems relevant to . . . choosing a method
of providing the required health care services.” While participants must make
price a primary factor it does not have to be the sole primary factor. As
detailed in paragraphs 78 and 79 of the 2007 RHC PP Selection Order,
participants are required to consider non-cost evaluation factors. Accordingly,
if a participant is either required under its applicable procurement rules or
chooses to consider factors or assign points related to a vendor’s commitment to
provide excess capacity for community use, it may do so, as long as the selected
vendor is the most cost-effective.

If a vendor only pays the incremental costs for excess capacity facilities
built on the vendors own initiative or at the request of the participant,
ownership of such facilities must be retained by participant and eligible HCP
entities (because the bulk of the costs are USF funded). In contrast, if the
vendor pays fair share for the excess capacity facilities, it may retain
ownership and/or sell the excess capacity to future customers.

The following must be considered when including excess capacity for community
use as a factor in selecting a vendor:

Participant must demonstrate that USF funds will not be used to pay for
such excess capacity.

The vendor must show that the costs for such excess capacity did not
increase the eligible costs for the dedicated health care network.

Participants must receive sufficient cost information to be able to
determine costs for the excess capacity apart from the costs for the dedicated
health care network, and should seek assurances from vendors that the bid cost
and quality of service for dedicated broadband health care network is the same
whether the excess capacity for community use is included or not.

Participants should clarify in their RFPs that responses to the RFP that
do not have commitments for excess capacity for community use, will also be
considered.

2010 NPRM: Frequently Asked Questions and
Answers

NOTE: The FAQs are provided for general information purposes only, and should not be
considered official summaries of the NPRM. The FAQs may be updated periodically. Interested parties may wish to check this web page
accordingly.

1. What is the purpose of the 2010 Rural Health Care Support Mechanism NPRM?

The 2010 Rural
Health Care Support Mechanism Notice of Proposed Rulemaking (NPRM) proposes and seeks comment on reforms to the universal service health care support
mechanism that are consistent with the recommendations set forth in the National Broadband Plan to expand the reach and use of broadband connectivity for and by
public and non-profit health care providers. This greater broadband connectivity has the potential to revolutionize health care delivery by providing access to state-of-the-art
Health IT solutions to more than 12,000 hospitals and clinics across the nation.

2. What initiatives does the 2010 Rural Health Care Support Mechanism NPRM propose?

The Commission proposes to create a health infrastructure program that would
support up to 85 percent of the construction costs of new regional or statewide
networks to serve public and non-profit health care providers in areas of the
country where broadband is unavailable or insufficient.

The Commission proposes to establish a health broadband services program that
would subsidize 50 percent of the monthly recurring costs for access to
broadband services for eligible public or non-profit rural health care
providers. The program would support dedicated broadband connections, which can
provide a reliable and secure option for broadband access.

The Commission proposes to expand its interpretation of “eligible health care
provider” to include acute care facilities that provide services traditionally
provided at hospitals, such as skilled nursing facilities and renal dialysis
centers and facilities.

The Commission proposes to expand its interpretation of “eligible health care
provider” to include administrative offices and data centers that do not share
the same building as the clinical offices of a health care provider but that
perform support functions critical for the provision of health care.

The current telecommunications program subsidizes the rates paid by rural health care providers for telecommunications
services to eliminate the rural/urban price difference for such services within each state. The NPRM does not propose changing the telecommunications program. However,
health care providers that seek support for telecommunications services under the new health broadband services program, would not be permitted to receive support from
the telecommunications program for the same service.

Projects under the current rural health care pilot
program will continue to be administered by the Universal Service Administrative Company (USAC). June 30, 2011 is the deadline for participants in the pilot program to
select a vendor and request a funding commitment from USAC. Based on lessons learned from the pilot program, the NPRM proposes to create a permanent program –
the health infrastructure program -- that would fund up to 85 percent of eligible costs for the design, construction and deployment of dedicated broadband networks
connecting public or non-profit health care providers in areas of the country where the existing broadband infrastructure is inadequate. The program would provide support
for the construction of state or regional broadband health care networks that can, for example, connect rural and urban health care providers, facilitate the transmission of
real time video, pictures, and graphics, bridge the silos that presently isolate relevant patient data, and make communications resources more robust and resilient.
Broadband infrastructure projects could include either new facilities or upgrades to existing facilities. In addition, funding could be used to support up to 85 percent of the
cost of connecting health care networks to Internet2 or National LambdaRail (NLR), both of which are non-profit, nationwide backbone providers.

Currently, the Internet access program provides a flat 25 percent discount to rural health care providers on their monthly charges for access to
the public Internet. The Commission proposes to replace the Internet access program with a new “health broadband services program,” which will subsidize 50 percent of
an eligible rural health care provider’s recurring monthly costs for any advanced telecommunications and information services that provide point-to-point broadband
connectivity, including dedicated Internet access.

We invite comment on the issues and questions set forth in the
NPRM. Interested parties may file comments on the NPRM by September 8, 2010 and may file reply comments by September 23,
2010. Specific filing requirements are explained in paragraphs 155-158 of the NPRM. Parties may also request to make oral ex parte presentations. For further
information, contact Ernesto Beckford at (202) 418-1523 in the Telecommunications Access Policy Division, Wireline Competition Bureau.

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